Leases

Question 1

What is a lease

Answer 1

A lease is both an instrument of conveyance and a contract between principal parties to uphold certain covenants and obligations.

Question 2

What makes a lease a binding contract

Answer 2

A lease is binding when each party accept the terms of the agreement and communicate their agreement to the other party. However, it’s always a good idea to have this in writing.

Question 3

In what circumstances are tenants required to receive an “Information about Brokerage Services” form?

Answer 3

If the tenant is entering into a lease that is longer than a year or considering an option-to-buy, the tenant must receive the form.

Question 4

What are some examples of how the Fair Housing Law restricts landlords?

Answer 4

It restricts:
How they are allowed to advertise a property
Questions they can ask on rental applications
The screening fee they charge a potential tenant
How they deal with their tenants

Question 5

What does the term “leaseholder estate” refer to?

Answer 5

It refers to a lessee or tenant’s ownership of a temporary right to land or property.

Question 6

How can an estate for years benefit both a tenant and a landlord?

Answer 6

Tenant often has a fixed in rent amount for the term of the lease.
Landlord has guaranteed rent for the term of the lease.

Question 7

What is the main difference between estate for years and periodic tenancy?

Answer 7

Estate for years has a definite ending date and periodic tenancy does not

Question 8

What is an estate at sufferance?

Answer 8

This estate is created when a tenant takes legal possession of the property but then remains on the property without the owner’s consent after the lease terminates.

Question 9

Where can licensees obtain residential lease agreement forms?

Answer 9

The Texas Association of Realtors and the Texas Apartment Association each provides a residential real estate lease form for its members.
The Texas Real Estate Commission provides a Buyer’s Temporary Residential Lease and a Seller’s Temporary Residential Lease available to licensees.

Question 10

What does the clause regarding security devices refer to in a lease agreement?

Answer 10

TexasProperty Code requires that landlords executing a lease agreements with a term over 90 days must change the locks from the previous tenant.

Question 11

List three covenants that are common in a lease. (See screen 23 for other correct answers.)

Answer 11

Demising clause
Description of the premises
Clear statement of term

Question 12

What does it mean if there are no limitations on the use of the property written into the lease?

Answer 12

If no limitations are written into the lease, the tenant may use the property for any lawful purpose, providing the tenant does not violate any deed restrictions

Question 13

Define a gross lease

Answer 13

The tenant pays a fixed rent and the owner pays the taxes, insurance and other normal ownership expenses.

Question 14

How is the increase in a graduated lease typically calculated?

Answer 14

By the increase in the property value based off an appraisal

Question 15

When is a percentage lease commonly used?

Answer 15

In commercial agreements with shopping centers or retail stores.

Question 16

How are residential leases different from commercial leases?

Answer 16

The terms are normally shorter than commercial leases
The clauses are fairly standard from one property to the next
The clauses are generally not negotiable

Question 17

List three commons causes of a lease termination. (See screen 34 for other correct answers.)

Answer 17

Term expiration
Voluntary agreement
Property destruction

Question 18

What are the most common causes of tenant default?

Answer 18

Tenant default occurs most commonly from failure to pay rent or maintain the premises.

Question 19

What is the most common form of landlord default?

Answer 19

The most common form of landlord default is failure to provide services and maintain the property condition.

Question 20

What happens to the lease if the tenant dies?

Answer 20

The lease does not terminate. It becomes part of the tenant’s estate, which is bound by the terms of the lease.

Question 21

A lease is both

Answer 21

an instrument of conveyance and a contract between principal parties to uphold certain covenants and obligations

Question 22

The legal essence of a valid lease is that it

Answer 22

conveys an exclusive right to use and occupy a property for a limited period of time in exchange for rent and the return of the property after the lease term is over.

Question 23

In a lease arrangement

Answer 23

the owner is the landlord, or lessor, and the renter is the tenant, or lessee.

Question 24

Several of the laws that apply to the sale of property also apply to leasing property. These include:

Answer 24

Statute of frauds
Agency disclosure
Lead Based Paint
Sex Offender Laws
Fair Housing Laws
American Disabilities Act

Question 25

There are four basic types of leasehold estates:

Answer 25

Estate for years
Estate from Period to Period
Estate at Will
Estate at Sufferance

Question 26

Estate for years

Answer 26

has a definite beginning and ending date, does not require notice to terminate, and does not have automatic renewal.

Question 27

Estate from period to period (periodic estate)

Answer 27

has no definite end date, typically run month-to-month, and requires proper notice to terminate.

Question 28

Estate at will

Answer 28

has no time limit. The possession is given with permission, but there is no agreement about the rent. Either party can terminate at will, with proper notice.

Question 29

Estate at Sufferance

Answer 29

is created when a tenant remains on the property without the owner’s consent after the lease terminates

Question 30

Holdover Tenant

Answer 30

A tenant who doesn’t leave when the lease expires

Question 31

The Law of Contracts governs the

Answer 31

making, interpretation, and enforcement of leases. Consequently, the requirements for making a valid lease are the same as for making a valid contract.

Question 32

The covenants (agreements or promises) in the lease are very important and include:

Answer 32

Capacity to contract
Demising clause
Description of the premises
Clear statement of term
Specification of rent and how it is to be paid
In writing
Signatures
Delivery

Question 33

There are many different types of leases.

Answer 33

Gross Lease
Net Lease
Graduated Lease
Ground/Land Lease
Percentage Lease
Proprietary Lease
Index Lease

Question 34

Gross Lease

Answer 34

requires the landlord to pay the property’s operating expenses, including utilities, repairs, and maintenance, while the tenant pays only rent.

Question 35

Net Lease

Answer 35

the tenant pays not only the rent for occupancy, but also pays maintenance and operating expenses such as taxes, insurance, utilities and repairs.

Question 36

Graduated Lease

Answer 36

the rent payments start at a fixed amount but increase as the lease term matures.

Question 37

Ground/Land Lease

Answer 37

concerns the land portion of a real property. The owner grants the tenant a leasehold interest in the land only, in exchange for rent.

Question 38

percentage lease

Answer 38

a lease whose rental is based on a percentage of the monthly or annual gross sales made on the site.

Question 39

Proprietary lease

Answer 39

conveys a leasehold interest to an owner of a cooperative

Question 40

Index Lease

Answer 40

provides for the adjustment of rent according to changes in a price index.

Question 41

A lease may terminate for any of the following causes.

Answer 41

Term expiration
Notice
Voluntary agreement
Property destruction
Condemnation
Foreclosure
Breach of contract

Question 42

Tenant default occurs most commonly from

Answer 42

failure to pay rent or maintain the premises. If a tenant is in default, the landlord may file a suit for possession, also called a suit for eviction.

Question 43

The most common form of landlord default is failure

Answer 43

to provide services and maintain the property condition. In an instance where the landlord’s negligence or disruptive action has rendered the property unlivable, a tenant may vacate the premises and declare that the lease is cancelled by default. This action, called constructive eviction, can nullify the tenant’s lease obligations if the claim succeeds in court. In order to obtain a constructive eviction judgment, the tenant must vacate the premises.

Question 44

If the landlord sells the property

Answer 44

the lease remains in effect and the new landlord is bound by its terms. If the landlord dies, the landlord’s estate remains bound to provide occupancy despite the landlord’s death.

Question 45

If the tenant dies, the lease does not terminate

Answer 45

It becomes part of the tenant’s estate, which is bound by the terms of the lease.